On The Quality Of Cryptocurrency Markets: Centralized Versus Decentralized Exchanges
نویسندگان
چکیده
Despite the growing adoption of decentralized exchanges, not much is yet known about their market quality. To shed light on this issue, we compare blockchain-based venues (DEX) to centralized crypto exchanges (CEX) by assessing two key aspects quality: price efficiency and liquidity. Using a novel comprehensive data set, find that overall CEX provide better quality but DEX become competitive for transactions exceeding \$ 100,000. Further, main determinant lower price-efficiency high gas stemming from proof-of-work blockchains. We propose empirically validate stylized theory liquidity provision, which links trading volumes, protocol fees, in equilibrium. Our model identifies quantitative conditions overtake future.
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ژورنال
عنوان ژورنال: Social Science Research Network
سال: 2021
ISSN: ['1556-5068']
DOI: https://doi.org/10.2139/ssrn.3984897